Sunwoda’s Q1 revenue increased by 31% year-on-year, but foreign exchange losses dragged down net profit attributable to shareholders, which fell by 70% year-on-year | Earnings Report Highlights

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Sunwoda Electronics' first quarter report for 2026 shows significant divergence. During the reporting period, the company achieved operating income of 16.116 billion yuan, up 31.14% year-on-year, with the power battery business maintaining high growth; however, net profit attributable to the parent was only 114 million yuan, down sharply by 70.49% year-on-year; non-recurring net profit was -1.27 million yuan, down by 100.49% year-on-year.

Surging financial expenses is the main cause of profit pressure. In the first quarter, financial expenses reached 491 million yuan, an explosive increase of 1072% year-on-year, mainly due to a significant expansion of exchange losses. It is worth noting that the company recognized more than 400 million yuan in non-recurring gains during the same period (mainly from changes in the fair value of derivative financial instruments), which provided important support for net profit.

The balance sheet shows that the company is in a high-intensity capacity expansion cycle. As of the end of the quarter, total assets reached 115.57 billion yuan, an increase of nearly 7.5 billion yuan from the previous quarter; inventory surged by 34%, projects under construction climbed sharply; long-term loans increased by 51% quarter-on-quarter to 13.6 billion yuan, and the financial leverage continues to rise.

On the cash flow side, warning signals have also been released. The net cash flow from operating activities in the first quarter was only 72.35 million yuan, a 95% shrinkage compared to 1.527 billion yuan in the same period last year, mainly due to large-scale stocking pushing up cash spending on procurement.

EV battery revenue drives growth, rising expenses erode profit

In the first quarter of 2026, Sunwoda's operating income increased by 31.14% year-on-year, mainly driven by higher revenue from electric vehicle batteries. Operating costs were 13.221 billion yuan, up 29.4% year-on-year, slightly lower than the revenue growth rate, thus improving gross margin. However, R&D, management, and sales expenses all surged, increasing by 28.3%, 20.4%, and 22.7% year-on-year respectively, offsetting the positive impact of gross margin improvement.

The most significant drag on profits this quarter came from financial expenses, which soared from 42 million yuan last year to 491 million yuan, an increase of 1072%. The company explained that the main factor was the sharp increase in exchange losses. As a battery manufacturer deeply involved in the global supply chain, Sunwoda's overseas business scale is large, and exchange rate fluctuations are increasingly impacting the profit statement.

Pressure is obvious on the profit side. First quarter net profit attributable to the parent was 114 million yuan, down 70.49% year-on-year. Notably, non-recurring profit and loss for the period amounted to about 115 million yuan, of which changes in the fair value of derivative financial instruments contributed 134 million yuan. Excluding this, non-recurring net profit was -1.27 million yuan, indicating the main business is on the edge of breakeven.

Additionally, income tax expense was negative (-27 million yuan) this quarter, resulting in an income tax gain, mainly due to a decrease in deferred income tax expense, which buffered the decline in profit to some extent.

Inventory soars, borrowing surges, Sunwoda’s capacity expansion is aggressive

Looking at changes in the balance sheet, Sunwoda is taking a massive expansion posture to meet booming downstream demand.

Regarding inventory, quarter-end inventory reached 14.436 billion yuan, up 34.18% from the beginning of the year. The company explained this as “stocking up according to business development needs.” Prepayments increased by 61% to 1.616 billion yuan, showing large-scale procurement orders have been placed, and subsequent deliveries are expected to support continued revenue growth. Contract liabilities (advance payments received) surged by 133% to 2.868 billion yuan, reflecting strong downstream customer demand and high order visibility.

In terms of debt structure, long-term loans jumped from 9.015 billion yuan at the beginning of the year to 13.606 billion yuan, an increase of 50.93% within the quarter. Net cash inflow from financing activities was 4.668 billion yuan, up 125% year-on-year, with cash received from borrowings reaching 11.2 billion yuan. Financing mainly went to capacity building, projects under construction rose from 10.6 billion yuan to 12.2 billion yuan, and long-term deferred expenses rose to 5.41 billion yuan, indicating that capacity investments are in intensive release.

Overall, the company’s asset-liability ratio has reached about 72.8% (liabilities 84.15 billion yuan / total assets 115.57 billion yuan), and financial leverage is at a high level. This period’s interest expense was 227 million yuan, and the rigid cost burden will be felt for several quarters to come.

Cash flow "bleeds," financing makes up

Sharp shrinkage in operating cash flow is the most worrying signal in Sunwoda's first quarter report. Data shows that in the first quarter, the net cash flow from operating activities was only 72.36 million yuan, a 95.26% decline from 1.527 billion yuan in the same period last year.

Looking at both collections and payments: cash received from sales of goods was 17.976 billion yuan, up 21.5% year-on-year, lower than revenue growth (31.14%), indicating that payment collection pace has slowed. Quarter-end accounts receivable were 17.695 billion yuan, down slightly from 18.887 billion yuan at the beginning of the year, but the absolute scale remains large. On the spending side, cash paid to purchase goods was 14.954 billion yuan, up sharply by 34.5% year-on-year. Large-scale stocking directly increased cash outflow and became the main pressure point for operating cash flow.

In investment activities, net cash outflow was 2.782 billion yuan, with expenditure on fixed asset purchases at 2.322 billion yuan, and external investment at 2.036 billion yuan, with capital spending strength remaining high.

Of the three major cash flows, only financing activities recorded positive inflow, with a net amount of 4.668 billion yuan. The company essentially relies on large-scale borrowing to maintain cash balance. At the end of the period, monetary funds were 22.864 billion yuan, and cash and equivalents were 12.424 billion yuan, so short-term liquidity is still acceptable.

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